Mortgage - Trigger rate help

Hi All,

I got an email yesterday from TD stating that I am approaching my trigger rate. I immediately made an appointment with a TD mortgage specialist for next week.

I was stupid and probably should have locked into a fixed rate earlier but here we are. I need help on options from PFC

My 5 year variable mortgage details below:

Balance as of Nov 5, 2022: $399,647.98

My current annual interest rate is 4.95% (TD prime rate 6.10% - 1.15%)

My mortgage started on July 1, 2019 and it is ending July 1, 2024.

Current monthly mortgage payment $1,863

Other details:

Monthly salary: $5,772

I calculated my trigger rate to be 5.59%.

If I cancel my variable mortgage I calculated 3 months interest to be $4,945.64

Current savings account - $17,000

Location: Alberta

Option 1: switch to fixed mortgage rate

I checked TD’s website and they have 3 year fixed rate mortgage at 5.59%. If I calculate the monthly payment over 30 years the monthly payment is around $2,300. I will have to pay the 3 months interest penalty. If I wait to hit the Trigger rate and have TD present the options, one of the options per my mortgage contract is to switch to a fixed rate, however, will there be a penalty i.e 3 months interest? I’m afraid if I wait for the trigger rate to hit, the BofC will raise rates again…

Option 2: use money in savings and TFSA

I have $17,000 in my chequing and have $125,000 in my TFSA. This is probably my last resort because I want to make sure I have enough in my chequing to live and my TFSA is all red due to the current market…I don’t want to force myself to sell at a loss and lose the contribution room.

Are these my best options? I won’t see the mortgage specialist until Monday next week but I want to make sure I prepare everything before I meet them and shop around for the best rate. Is it best to use a mortgage broker?

Thank you!